NHS Payment Scheme

The 2022 Health and Care Act replaces the National Tariff Payment System with the NHS Payment Scheme (NHSPS). The NHSPS contains rules to establish the amount payable for NHS-funded secondary healthcare.

2023/25 NHSPS cames into effect on 1 April 2023.


About the NHS Payment Scheme

The 2023/25 NHSPS has been set for two years (2023/24 and 2024/25). It contains rules for four payment mechanisms:

  • Aligned payment and incentive (API) – covers almost all NHS provider activity and comprises fixed and variable elements. Almost all elective activity, and all activity which form part of the ERF, is included in the variable element and paid for using 100% of NHSPS unit prices.
  • Low volume activity (LVA) block payments – applies to almost all NHS provider/commissioner relationships with an annual value below £0.5m. Commissioners should pay providers the nationally set LVA value, based on a three-year rolling average, with no other transactions in-year.
  • Activity-based payment – applies to all services with NHSPS unit prices delivered by non-NHS providers. Activity is paid for using 100% of NHSPS unit prices for each unit of activity delivered.
  • Local payment arrangements – providers and commissioners locally agree an appropriate payment approach.

The NHSPS includes unit and guide prices (published in Annex A), calculated using largely the same method as National Tariff prices (for detail, see Annex D). The inflation cost uplift factor for 2023/24 is 2.9% and the efficiency factor is 1.1%. Please note: these factors don’t reflect pay arrangements for 2023/24. Please see 2023/24 pay award: revenue finance and contracting guidance for information on the Agenda for Change pay award, and the finance and contracting actions that NHS organisations should take in response.

If you have any questions about the NHS Payment Scheme, please contact pricing@england.nhs.uk.

Introduction to the NHS Payment Scheme – April 2023 webinar

Click here to view the Introduction to the NHS Payment Scheme webinar that took place in April 2023. The session briefly described recent payment system developments and then gave detail of the 2023/25 NHSPS.

Price changes between consultation and final NHS Payment Scheme

One of the proposals in the consultation on the 2023/25 NHSPS was to update the data used to calculate market forces factor (MFF) values. The resulting MFF values covered a narrower range than the MFF values in 2022/23, reducing the amount of money that would be distributed by MFF (assuming prices were used for all activity). Mistakenly, the difference between the amount distributed through MFF was not included in the 2023/24 prices consulted on. This has been added for the final NHSPS, with a 0.52% uplift applied to all prices. There is no change to ICB allocations as these correctly account for the MFF values.

The consultation change log contains details of all changes between consultation and final 2023/25 NHSPS publication.

Related resources

Sign up for payment system updates

If you’d like to be notified when we publish new information on the national tariff, please sign up for our email updates.

Applying for variations

Providers and commissioners can apply for variations to the NHSPS. All applications should use the variations request template and need to be approved by the relevant NHS England regional team(s) before submission to the NHS England national team. Completed and approved tempaltes should be sent to pricing@england.nhs.uk.

Nominating changes to the high cost drugs and devices lists

Within the NHS Payment Scheme, some high cost drugs and devices are excluded from the calculation of unit prices and national prices. Funding for these items is then either included in a fixed payment or paid for in addition to the price for the related service. As medical practice changes and new drugs and devices are developed and adopted, the lists of high cost drugs and devices needs to be kept as current as practically possible.

To nominate a drug or device to be added or removed from the high cost lists, please complete the following form and submit it to pricing@england.nhs.uk.

The deadline for submitting forms to be considered for 2024/25 is 31 May 2023. We cannot guarantee we will be able to consider submissions received after this date. All submissions received before the deadline will be carefully reviewed and discussed with high cost steering groups.

Join our FutureNHS workspace

Our Payment system support workspace on the FutureNHS collaboration platform contains materials, tools and products being developed to support people to implement the payment system.

Currently launched on the workspace include:

  • ICS Cost Benchmarking Dashboard – a dashboard showing cost and activity data for a whole system, at an ICS level. It allows systems to identify service level spend and patient pathway patterns.
  • Costed pathways (supported by GIRFT) – a methodology and worked example for systems to cost patient pathways, highlighting variation from clinical best practice guidelines in activity and costs.

We welcome your feedback on these products, and will continue to develop and update them based on the comments we receive.

Please contact pricing@england.nhs.uk if you have any questions.

Access to past national tariffs

The NHS Payment Scheme replaces the National Tariff Payment System. You can download all formal documents and policies from each previous tariff year. Please contact pricing@england.nhs.uk if you need any more information.